The stock sale, Goldman's sixth since 2009, completes the firm's exit from China's biggest lender ahead of new international capital rules that ratchet up the cost of holding stakes in other financial companies.

Goldman bought a 4.9% stake in ICBC for US$2.58 billion in April 2006, before the Chinese bank went public in Hong Kong. It has been a lucrative deal for the firm. Including the latest sale, Goldman had raised about $10 billion from sales of ICBC shares, more than triple its initial investment.

But the stake was a conspicuous, and at times volatile, item in Goldman's quarterly results. And like Western firms' cross-border investments into Chinese banks, Goldman's ICBC stake never fulfilled its promise as a potential gateway to a much bigger slice of the investment-banking market.

Many Western banks had once viewed their stakes in Chinese counterparts as more than just a savvy investment in the nation's future.

"The American banks wanted to get a piece of Chinese banks because they knew the Chinese were quite capable of avoiding Wall Street to raise capital," said Charles Geisst, a finance professor at Manhattan College and the author of several books on Wall Street history. "This was a way of getting in."

A person familiar with the Goldman's views said its relationship with ICBC did help the firm's understanding of the Chinese market.

Goldman now has 300 employees in mainland China and operates a joint venture with a Chinese securities firm.

But last year Goldman ranked 10th in fees from advising Chinese companies on mergers and underwriting their stock and debt offerings, according to Dealogic. In 2005, the last full year before the firm's initial ICBC investment, Goldman ranked fifth.

Unable to reap any meaningful strategic value from these deals, many U.S. and European banks increasingly looked at their Chinese stakes solely as financial investments, according to several legal advisers to large banks.

With new capital rules looming, and China's banking system grappling with slowing profit growth and the potential for more bad loans, the ICBC sale appeared inevitable, they said.

The sale will help boost Goldman's capital levels. International regulations known as Basel III will increase the costs of holding minority stakes in financial institutions, forcing big banks to set aside more capital in order to maintain regulators' key measures of balance-sheet strength.

The ICBC stake has also affected Goldman's earnings. Volatility in ICBC's shares led Goldman to report a full-year net loss in Asia in 2011, its first since the 2008 financial crisis.

Goldman isn't the first foreign strategic investor that has exited from its investment in a Chinese bank. After the global financial crisis, UBS AG and Royal Bank of Scotland Group PLC, for instance, both sold their stakes in Bank of China Ltd., another large state-controlled Chinese bank, as they sought to bolster their capital.

In some cases, Chinese regulators have been unhappy with deals that have netted foreign banks major financial gains but failed to realize the potential long-term benefits of partnership that Beijing had originally hoped for.

Further Coverage

Goldman is selling the Hong Kong-listed shares in range of 5.47 Hong Kong dollars to HK$5.50 (70 U.S. cents to 71 U.S. cents), representing a discount of 2.5%-3% to Monday's closing price of HK$5.64, according to a term sheet seen by The Wall Street Journal on Monday.

ICBC shares have risen 7% in the past month but are up just 2.5% year to date.

The sale could be the fourth-largest share placement in Asia so far this year. A US$3.1 billion share sale by Chinese oil giant China Petroleum & ChemicalCorp., or Sinopec, in early February is the biggest such deal so far this year.

The Goldman sale comes after U.S.-based fund house BlackRock Inc. sold 27.4 million shares in ICBC, according to a filing to the Hong Kong stock exchange. The 0.04% stake sale trims its holding in the Chinese bank to 5.99%.

Goldman Sachs is the sole bookrunner for Monday's share sale, the term sheet said.

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